HR-5077-119
Referred to the House Committee on Financial Services.
Sponsored by Maxine Waters (D-CA)
What it does
This bill would amend the Housing and Community Development Act of 1974 to add "new construction of affordable housing" as an eligible activity under the Community Development Block Grant (CDBG) program, which currently allows rehabilitation but not new construction of housing with these funds. The change would apply only to CDBG funds appropriated after the bill's enactment, and new construction projects would need to meet the low- and moderate-income benefit requirements already used for rehabilitation projects.
Who benefits
Local governments and nonprofit developers that receive CDBG funds, who would gain a new tool to build affordable housing rather than only repair existing units; low- and moderate-income renters and homebuyers in communities that choose to use grant funds this way; construction firms and building trades workers hired for new affordable housing projects.
Who is hurt
Other CDBG-eligible activities (such as public services, infrastructure, or rehabilitation projects) could receive less funding if local governments redirect a fixed pool of grant dollars toward new construction; existing affordable housing rehabilitation contractors could see reduced demand if cities shift priorities; taxpayers if the change increases overall program costs, though the bill itself does not increase CDBG's overall authorization level.
Supporters argue
Supporters argue that CDBG's current rules unnecessarily block cities from using federal funds to build new affordable housing, even as many communities face severe shortages, and that allowing new construction would give local governments a needed tool to expand the housing supply where rehabilitation alone cannot meet demand. They contend this modest, targeted fix removes a bureaucratic restriction without creating new spending obligations beyond what Congress already appropriates.
Opponents argue
Opponents argue that expanding CDBG-eligible activities to include new construction could spread already-limited grant funds more thinly across competing local priorities like infrastructure and social services, potentially reducing funding available for existing rehabilitation and community programs. They contend that without additional appropriations, allowing this new use may not meaningfully increase housing supply and could simply shift federal dollars away from other pressing local needs.
Constitutional context
Congress's authority to structure federal grant conditions to states and localities derives from the Spending Clause (Article I, Section 8); South Dakota v. Dole (1987) established that such conditions are valid so long as they are related to a federal interest and not unduly coercive, and this bill's narrow adjustment to program eligibility does not appear to raise novel constitutional questions.
Checks and balances
Congress defines what activities are eligible under the CDBG program, while HUD retains authority to issue implementing regulations and oversee grantee compliance, with no significant shift in power between branches.
Historical precedent
The CDBG program has been amended multiple times since its 1974 creation to adjust eligible activities, though this specific expansion to permit new construction of affordable housing (as opposed to rehabilitation) has not been previously enacted.